Hi guys, I’ve just started a blog/journal of my daily trades.
I’m a technical [analysis] trader with a slight bias to what I consider the key fundamental releases.
My aim is to bring you insight, analysis and commentary on the daily, weekly and monthly activity in the FX world. In addition to regular economic updates and insights I�ll be publishing a �warts and all� trading log of my activities.
I don’t use any robots or scripts, and I use very few indicators as I don’t trust them! I mainly rely on the tried and tested regime of trends, trendlines, sentiment, candle patterns and S/R levels.
I hope you enjoy what you read and see, comments are encouraged!
EURO TRADE ANALYSIS & FMOC RELEASE
In Trading Analysis on August 12, 2009 at 8:31 PM
It’s been an interesting day on the EUR/USD with a steady move up away from the long-term trend at ~4.4100 to a new high for the week of 4.4246… and then the FMOC Release rained on the parade!
The above five minute (5m) chart shows out trade for the day - using support levels in the RSI to follow the trend we took a Long market position at 1.4140 keeping a close eye on upward resistance at 1.4212.
Profit was taken after both RSI support at 60 and the following trendline were broken indicating a bearish move against our Long.
A significant ripsaw occurred at approximately 19:00 GMT as the FMOC released a slightly upbeat, yet reserved statement. The opening paragraph of the FOMC statement was, as usual, just a characterization of information readily available. The impression, though, is that the Fed is winning the battle. Economic activity is leveling out. Financial market conditions have improved. Household spending shows signs of stabilizing, though it remains constrained.
ARE WE ABOUT TO SEE A MASSIVE USD RALLY?
In Commentary on August 11, 2009 at 9:50 PM
I’d like to present you with some interesting details that show the whole world is bearish on the dollar!
Take a look at this chart, the red areas mark the lowest percentages of bullish sentiment amongst the Futures traders over the past three years. The ‘Daily Sentiment Index’ for the Dollar shows just 3% bulls - a level that’s only been reached five times in the past 20 years!
In addition the Daily Sentiment Index shows a considerable bias against the dollar, across the majors - 90% bulls for the Swiss franc, 91% bulls for the British pound, 96% bulls for the euro, and 98% bulls in the Canadian dollar.
With sentiment so overly biased the potential for a major trend change is upon us, for example in April-July of 2008 bullish sentiment towards the major currencies were at similar levels as they are now and just look what happened - it was the start of the largest, most powerful dollar rally in the past 10 years.
We’re also at a potential turning point in the EUR/USD, the major six month trendline is potentially faltering as it faces a stiff decline in price from above - the next few days will be telling.
Today’s Provisional German Q2 GDP report, out at 06.00GMT+1, should show a marked improvement on the horror story that was the horror story that was the first quarter’s number of -3.8% q/q, the worst quarterly reading since re-unification in 1990, while the y/y number was an eye-popping -6.9% Talk that the stimulus package measures are beginning to come through and comments from Econ Min Guttenberg that the German economy held steady in Q2 gives rise to optimism for today’s number, with market’s forecasting a -0.3% q/q figure and a annual wda figure of -6.7%
Any shocks in the figures will move the market so if you’re taking a position be careful - EUR/USD is currently hovering around the support built on yesterdays rally to 1.4216.
Today we hit both the 50% Fibonacci level on our daily chart (past 7 trading days) and the 50% level on the Year To Date (YTD) - will the up trend falter?
How I’ll trade this key level.
Wait for a move up to 1.4295 for a continuation.
Wait for a consolidation down to 1.4206 to test bull support.
As they say, fortune favours the bold… perhaps I’ll be bald after this one though?
No seriously, there is a strategy you can use to trade large news trades, they don’t always work of course and they are inherently risky compared to the usual major S/R trades, however I enjoy working with them so here goes.
The below 15m chart is dissected in to most, if not all of the key S/R levels of the traded week.
On the very outer edge of the current price I’ve selected two key levels, one high to Short, one low to go Long.
Entry Long at 1.4205 (sorry not shown on the chart but you’ll see it) with the stop at 1.4180, Short 1.4374, stop a few pips past the higher lever.
Obviously if the news reports are wildly different to the forcasts even thse outer levels can be punched through.
Sorry for not posting, I’ve been refining my process.
Instead of posting up hectic trades I decided to take a step back and re-work a few things, I’ll be posting up more info this weekend with some great results.
Well that’s the first month over and done with, results are here - Trades
Starting to get a feel for this style of trading now, I’m writing an article on stops placement and expanding range trading, both of which I’ve been working to improve lately and profit from.
We can see a key Support and Resistance setup is appearing on the EUR/USD 15m chart.
1.4344 has proven to be a past master and a successful shorting opportunity, with another touch the only concern would be a break higher 1.4367 which incidentally also offers a short but 344 would provided Bear resistance once broken.
On the flip side we have a Long at 1.4193 which has seen off a big sell-off in to this area and supported subsequent buying power away, however be aware of the previous candle wick punching south towards 1.4172.
If you decided to take any of these levels on the Euro, let us know how you get on!
